Pennsylvania's focus on investment in its life sciences industry began with a previous governor, Republican Tom Ridge, now the head of the U.S. Department of Homeland Security, said Pennsylvania Biotechnology Association President Fritz Bittenbender, noting that the state's portion of settlements with tobacco companies "starts with Gov. Ridge's leadership personally."
Gov. Ridge believed "that because of where we were getting those monies, that we should be investing them in the health and welfare of Pennsylvania," Bittenbender said. "Fundamentally, Gov. Ridge also believed that the life sciences industry was a growing part of Pennsylvania's economy and a cornerstone of the economic future of Pennsylvania."
That commitment continues today - Democratic Gov. Edward Rendell awarded $59 million in grants to 37 health care institutions, colleges, universities and nonprofit health organizations across the state in 2002-2003.
With such support, a plan was hatched to invest in the state's industry and its various research institutions, such as the University of Pennsylvania in Philadelphia, Penn State and the Hershey Medical Center in State College. Although a portion of the settlement money was spent on other health-related programs, such as smoking cessation and prescription drugs for the elderly, a portion of that money - about $2 billion - was to be focused on the life sciences industry over about a 20-year lifespan, Bittenbender said.
Of that $2 billion, about $1.6 billion is allocated for grants going to research institutions in the state. The allocations were determined in two ways: from a formula based on the amount of funding from National Institutes of Health in Bethesda, Md., and a competitive bid process that required a board be established to determine where the money went.
Two of the top NIH-funded institutions are in Pennsylvania, with Penn being No. 1 in 2003 and the University of Pittsburgh being in the top 10, he said.
By using the NIH formula to allocate investment money, it provides a "way to support those federal research institutions with some state dollars."
Greenhouses Nurturing Growth Of Biotech Companies
A significant component of the state's use of tobacco settlement money was creating three "greenhouses" for the three areas of the state: west, central and east.
"The background of the greenhouses was it was supposed to be a place where research institutions, industry and the financial community came together to support the growth and creation of intellectual property and commercialize intellectual property," Bittenbender said.
The greenhouses were loosely based, he said, on a model developed early in Ridge's administration called the Digital Greenhouse of Pittsburgh, which was designed to attract information technology companies to Pittsburgh.
The greenhouses are BioAdvance - Biotechnology Greenhouse of Southeastern Pennsylvania; the Life Sciences Greenhouse of Central Pennsylvania; and the Pittsburgh Life Sciences Greenhouse. After studying other states, it was determined that a funding gap in Pennsylvania was preventing companies from commercialization, Bittenbender said. To combat that, each greenhouse received about $33 million to provide pre-seed and seed funding to companies.
"[The greenhouses] take a look at the research that's going on in universities and provides the funding stream to help commercialize it, which didn't exist previously, and gets these companies ready for serious venture funding," Bittenbender said.
The legislation that created the greenhouses also allocated about $60 million for venture capital and created the Tobacco Settlement Investment Board to oversee how the money is distributed.
The greenhouses can show results and infrastructure in place to support future efforts.
In southeastern Pennsylvania, for example, Bioadvance has four research areas with companies eligible for greenhouse awards: therapeutics; tools or platform technologies; devices; and diagnostics. As a result, Cephalon Inc., of West Chester, Pa., which has the wake-promoting drug Provigil, has decided to build new corporate headquarters in southeastern Pennsylvania, creating 650 new jobs over the next five years. In April, BioAdvance reported that it had invested more than $3 million in seed funds to initial greenhouse fund recipients. Those recipients included Eagle Vision Pharmaceutical Corp., which is developing agents designed to enhance the power of magnetic resonance imaging in diagnosing heart disease, and Integral Molecular, an early stage biotechnology company that has technology that simplifies the discovery of drugs against diseases such as cancer, HIV and arthritis.
Success: Greenhouses Getting The Job Done
"I think the greatest sign of success is that in the [first round] they went through about 80 applications for funding - 80 companies that were in the start-up stage out there in the life sciences that had credible applications for funding," Bittenbender said.
The Pittsburgh Life Sciences Greenhouse was founded by the University of Pittsburgh, Carnegie Mellon University, UPMC Health System, the Commonwealth of Pennsylvania and the local foundation community. At the Pittsburgh Life Sciences Greenhouse, Crystalplex Corp., a developer of technology for drug discovery and clinical diagnostics, moved to Pittsburgh from its scientific founders' base at Emory University in Atlanta. Its CEO, Alan Seadler, went through the greenhouse's executive program, which matches experienced executives with companies in need of leadership. Seadler told BioWorld Today that ultimately it was decided there was a match between his previous experience and Crystalplex, which now has three employees.
The Life Sciences Greenhouse of Central PA (LSGPA), with its main selling point being Penn State and the Hershey Medical Center, is focused on what it calls "three areas of regional strength and strategic significance: rational drug design and drug delivery systems; biomedical devices and bionanotechnology. The greenhouse has established the Technology Development Fund to help commercialize discoveries in the life sciences. That fund, the greenhouse said, will provide up to $100,000 for one year to companies, and the greenhouse actively is soliciting proposals for the second-round funding now - proposals are due mid-October. The first round in April granted nearly $1.4 million to 14 area researchers. In return, LSGPA is seeking a portion of the revenues generated from successfully commercialized projects as a means of replenishing the fund, it said.
"The program provides tremendous opportunity for growth there," Bittenbender said.